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MARK COLVIN: There are warnings that one of Australia’s most prestigious wine regions could be at risk if gas exploration goes ahead in South Australia.

Agriculturalists in the Coonawarra are calling for a moratorium on the practice, over fears that CSG drilling could harm underground water reserves. There’s already been exploratory drilling in the region to investigate the viability of shale gas deposits.

Caroline Winter reports.

CAROLINE WINTER: Just outside the town of Penola in South Australia’s south-east is a test well. It’s one of two which is being drilled to find out more about what sits below the surface.

REG NELSON: So what we hope to find is the potential for gas, whether it’s what people might call conventional or unconventional, it’s part and parcel of the process of exploration.

CAROLINE WINTER: Reg Nelson is managing director of Beach Energy. The mining company has come under fire, for its exploration in the region.

RED NELSON: There are myths and outright lies that are promulgated by people who have different agendas. I understand that people have concerns. We’re happy to talk to them honestly and openly to allay any concerns.

CAROLINE WINTER: The uncertainty surrounding the potential for mining there has prompted a number of protests and community meetings. It has agriculturalists and vignerons in the nearby wine region particularly concerned.

PETE BALNAVES: One of the biggest issues the area’s had to deal with. It’s got the potential to have some serious effect on a lot of industries.

CAROLINE WINTER: Pete Balnaves is the vineyard manager from Balnaves of Coonawarra. He’s worried that if the company finds gas, it will use hydraulic fracturing, or fracking, to tap into underground reserves, threatening the groundwater and highly valued agricultural land.

PETE BALNAVES: There’s known leakage between the top unconfined aquifer and the bottom aquifer, and so even taking water out of the lower aquifer could change the equilibrium.

CAROLINE WINTER: Pete Balnaves says that clean water is precious, and already there’s not enough to go around, let alone support the mining industry.

PETE BALNAVES: All the water that’s here at the moment is allocated. There’s only about 40-50 per cent of it that’s actually being used, and the fact that we’re taking cuts when only 40-50 per cent is being used shows you how fine the line is.

CAROLINE WINTER: If it goes ahead, it would be the first time the technique has been used in an agricultural area in South Australia.

Tony Beck is a specialist irrigator south of Penola.

TONY BECK: At least half of my income is directly or indirectly earned from irrigation and using water resources sustainably. So I have a huge stake in protecting our water resources.

CAROLINE WINTER: He says if it has to occur, gas exploration shouldn’t be on the doorsteps of highly productive food producers.

TONY BECK: The likelihood of being successful in cementing the zones between the aquifers is really quite low. In other words, the risk of something bad happening and saline water being pushed from the deep, salty aquifers up into the clean aquifers is really quite high.

CAROLINE WINTER: But Beach Energy’s managing director Reg Nelson disputes that, and a number of other claims.

REG NELSON: We set in triple layers of steel and concrete casing to depths of 500 metres below all of the known major aquifers in the region. I call it a triple steel clad guarantee that the aquifers will not be compromised.

CAROLINE WINTER: There’s also been suggestion that there’d be thousands of wells set up in the area. Is that correct?

REG NELSON: Absolute rubbish. I’ve seen reports from 3,000 to 20,000 wells. They’re confusing it with coal seam gas. It is nothing, I repeat, nothing like coal seam gas.

CAROLINE WINTER: He says the company is preparing to drill a second well and will spend up to a year analysing the data before any decisions are made.

Pete Balnaves says there’s only one outcome he’s interested in.

PETE BALNAVES: What we want and the industry standpoint is that we’re looking for, as Victoria have brought in on their side of the border, a four year moratorium on gas exploration until the correct regulatory framework can be brought into place to allow exploration or any other industry to come into the Water Allocation Plan in a controlled manner.

PIP COURTNEY, PRESENTER: One issue that seems to polarise farming communities more than most others is coal seam gas. An economic saviour to some, others fear the long-term damage the industry could do to underground water supplies. The latest front in this ongoing battle is South Australia, with a proposal to drill exploration wells near prime agricultural land in the state’s south-east. More from Leah MacLennan.

LEAH MACLENNAN, REPORTER: Over the past five years, anti-coal seam gas demonstrations have mostly been restricted to Queensland and NSW.

But the protests are now spilling over the border into SA. These farmers and environmentalists are trying to stop gas exploration in the state’s south-east.

Beach Energy is putting down test drills near Penola. If it finds gas, the company may have to extract it using hydraulic fracturing – fracking – a technique that uses a pressurised mixture of sand, water and chemicals to tap into underground gas reserves.

REG NELSON, BEACH ENERGY: Well first of all fracking is a term we don’t use because it encompasses so many different things. It’s a process that’s been around since the 1890s, but, as I say, it covers so many things and it’s evolved in so many different ways. What we’re looking to do, possibly, is to apply very precise fracture stimulation to the deep rocks at probably four kilometres depth.

LEAH MACLENNAN: If this so-called unconventional gas extraction goes ahead, it will be the first time the technique has been used in an agricultural area in SA, and that’s angered some of the locals.

Over the last six years, Anne Daw has gone from south-east landowner to anti-mining lobbyist.

ANNE DAW, ANTI-MINING CAMPAIGNER: We only have 4.6 per cent agricultural prime land and cropping land left in the whole state outside of pastoral areas and that is not much to ask to be preserved and exempt from mining petroleum and unconventional gas.

LEAH MACLENNAN: The protest movement has drawn the attention of non-Government MPs in the South Australian Parliament, who are pushing for new laws to restrict fracking and mining in agricultural areas.

ROBERT BROKENSHIRE, SA FAMILY FIRST MP: And we need to address it before we lose our best agricultural land. Some say the Mining Act is balanced; I say that the Mining Act is in favour of mining and makes it difficult for farmers. I’m arguing that in the state’s interests, you know, we – Family First are not anti-mining, but we say there are places where you can mine and places where you should be able to unquestionably proceed with farming.

LEAH MACLENNAN: But the State Government isn’t interested. It argues there are sufficient safeguards overseen by the Environment, Resources and Development, or ERD, Court.

TOM KOUTSANTONIS, SA MINISTER FOR MINERAL RESOURCES: Prime agricultural land is exempt from the Mining Act, but people can, if they find resources, go to the ERD Court and have that, of course, overturned. And that’s right, and that’s the right thing to do because you can have multiple land use principles that do show that mining and farming can co-exist.

LEAH MACLENNAN: That’s of little comfort to people like Jack England, a third-generation farmer near Kingston, and he’s the vice-chair of Livestock SA.

JACK ENGLAND, LIVESTOCK SA: Some farmers will probably want to sell out and they’re quite pro-mining and there are others that are against it. So we have to be careful that we represent the interests of all farmers, make sure all the drilling, if it goes ahead, is Mickey Mouse and they do the right thing in terms of biosecurity, sort of equity for farms and that sort of thing.

LEAH MACLENNAN: The biggest concern for farmers is the potential impact of deep drilling, mining and hydraulic fracturing on aquifers.

JACK ENGLAND: The best thing about the south-east down here is we can drill a hole, dig a hole and we either have a well or into the sub-Artesian Basin and we’ve got water for our livestock and/or irrigation and the wine crops as well. So that’s the most stable resource that we’ve got down here and we certainly want to protect it as much as possible.

LEAH MACLENNAN: Any threat to aquifers is of great concern to the local wine industry.

DENNIS VICE, HIGHBANK WINES: We know for a fact that there are three aquifers. We’re actually standing just a matter of a few feet above the first aquifer and it’s a very unique situation in vineyard areas around the country.

DENNIS VICE: Beach conducted a local meeting here and invited everyone to come along to kind of put their position forward, and I think from then on people began to realise that it was a reality, that they were really seriously going to do exploratory wells and put wells down through the aquifers, trying again to use the fracking technique to be able to extract gas from these wells that are tremendously deep.

LEAH MACLENNAN: Because the wells will go through aquifers, locals want to make sure there’s no leaking or contamination.

REG NELSON: What we will do, and this is part of our normal practice, is to drill and case those aquifers so that they’re entirely separated before we drill and possibly encounter any gas. Now I say this because people have drilled there and we have drilled there for so-called conventional gas and made gas discoveries and there’s been no detriment.

LEAH MACLENNAN: This is not the first time there’s been mineral exploration in the region.

Debbie Nulty’s farm adjoins Anne Daw’s property. In the early 1980s, Western Mining explored this area for brown coal. The pair say this old drill well is an example of what can go wrong.

DEBBIE NULTY, FARMER: We noticed that it was falling away from the side and we were concerned about the aquifer.

LEAH MACLENNAN: Beach Energy says it wouldn’t leave its wells in such a state, using this photo as an example of one of their rehabilitated drill holes.

REG NELSON: I’ve been farming most of my life in various areas, presently broadacre cropping. I’ve lived in rural communities, I empathise with rural communities. I believe in the Golden Rule, you know: do unto others as you would have done unto yourself.

LEAH MACLENNAN: Initially the Nultys were told they would have to rehabilitate the well themselves, and if they didn’t, they could face a $15,000 fine.

And how much would it have cost you to rehabilitate yourself?

DEBBIE NULTY: I’m not sure about the costs because in my mind it wasn’t my drill hole and I really hadn’t even thought that I was ever going to fix the drill hole. It would have been – I would have, yes, yelled from the treetops before I would have fixed it, basically.

LEAH MACLENNAN: After long negotiations, the Government agreed to fix the dilapidated well.

It’s a small victory for Debbie Nulty and for Anne Daw, but these two women are fighting a much longer battle: trying to stop mining on agricultural land altogether.

“ONE of the nation’s most prestigious wine regions – the Coonawarra, on South Australia’s Limestone Coast – has emerged as the latest battleground in the conflict between mining interests and agriculturalists.”

At a recent meeting of the Limestone Coast Grape & Wine Council a sub committee was formed and is calling for a moratorium on unconventional gas mining in all its forms, that is high volume high pressure slick-water fracturing.